Spain’s De Guindos meets Germany’s Schaeuble as Catalonia seeks aid

The outlook for Spain is becoming more serious, as Catalonia, the second biggest region of the country, will follow Valencia and Murcia and ask for a government bailout.

According to press reports, Catalonia will seek aid from a new €18bn public fund set up by the central government.

On July 20, Valencia became the first region to request for €3.5bn aid to cover maturing debt costs; two days later, Murcia said it was considering a similar move.Several others of Spain’s 17 autonomous regions could follow the same request.

Spain’s borrowing costs rose further today, as fears that the government will be forced to ask for international bailout to pay its debt are mounting. The yield on the benchmark 10-year Spanish government bond reached 7.585%.

Later today, Spanish economy minister Luis de Guindos (pictured) is expected to meet German finance minister Wolfgang Schaeuble, even if a broader Spanish bailout request is not on the meeting agenda.

“We believe that the reforms already begun by Spain will help calm the markets,” German spokeswoman Marianne Kothe told Reuters. She added that financing problems reported by Spanish regions had nothing to do with an agreement to bail out Spain’s banks.